WASHINGTON — Congress passed legislation late Thursday that will expand community bank access to the debt markets in order to finance acquisitions.

The bill would increase the asset size for holding companies to $1 billion — from $500 million — to earn an exemption from the Federal Reserve's Small Bank Holding Company Policy Statement. The Fed's policy limits the amount of debt acquirers can take on to facilitate a transaction.

The House originally passed the bill in May, but both chambers had approved an amended version by Thursday night. It will now go to President Obama's desk for his signature.

"This legislation accomplishes a major goal," said James Ballentine, executive vice president of the American Bankers Association. "It makes it easier for community banks and thrifts to issue debt and raise capital — and thus increase the lending that is so critical to growing their local economies."

Camden Fine, chief executive of the Independent Community Bankers of America, said the group "applauds Congress for approving important to legislation to modernize" the policy. "This legislation would make it easier for community bank and thrift holding companies to raise additional capital and improve lending."

The measure also had apparent support from the central bank. In congressional testimony last month, Fed Gov. Daniel Tarullo noted that the percentage of companies eligible for an exemption had fallen from 85% to 75% since the threshold was last raised in 2006.

"The balance of considerations argues for" raising the threshold "to facilitate transfers of ownership of small banks," Tarullo said.

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